Millions of holidaymakers are in line to receive cash refunds after tour operator Tui was pressured by the watchdog.
The UK’s largest package holiday company has promised to pay outstanding refunds for trips cancelled because of the pandemic by the end of the month and will also write to its customers who hold credit notes to make clear they are still entitled to their money back.
The commitment was made as part of the Competition and Markets Authority’s (CMA) investigation into the package holiday sector.
Tui would not confirm how many customers have been affected but experts said millions have been forced to wait months for refunds across the whole industry.
The announcement by Tui will put other companies under pressure to follow suit. The CMA is understood to be investigating a number of firms and wrote to several at the end of August to warn them over unpaid refunds.
Andrea Coscelli, the CMA’s chief executive, said: “It’s absolutely essential that people have trust and confidence when booking package holidays and know that if a cancellation is necessary as a result of coronavirus, businesses will give them a full, prompt refund.”
He added: “The CMA is continuing to investigate package holiday firms in the context of the Covid-19 crisis. If we find that businesses are not complying with consumer protection law, we will not hesitate to take further action.”
Millions of holidays and flights were cancelled when the pandemic struck with travellers often being given the option to take a cash refund or accept a refund credit note or voucher for the value of their trip.
Consumer law states that refunds for cancelled flights should be paid within seven days and for package holidays within 14 days.
However, the influx of refund requests made these targets unachievable and an industry expert pointed out that tour operators were forced to wait for refunds from third parties before passing cash on to customers.
A spokesman for Tui said: “We remain sorry that holiday refunds took longer to process during the height of Covid-19.
“The volume of cancellations and customer contacts was unprecedented, and at a time when retail stores, contact centres and offices were closed because of the nationwide lockdown.”
She said the firm had “worked tirelessly” to improve its systems.
Earlier this week Virgin Atlantic promised to refund its customers by the end of October. Chief executive Shai Weiss told the BBC that the firm had received millions of requests and it had expanded its team to deal with the backlog.
Rory Boland, of consumer group Which?, welcomed Tui’s commitment but said there were many other companies continuing to flout the rules.
He said: “Over the last few months Tui has been far from the worst offenders and there will be a lot of other companies [on the CMA’s radar].”
He said Which? had received several complaints from customers attempting to get refunds from online firms who had been unable to contact the company to make their request. He said a small number of firms were still “forcing” refund credit notes onto customers.
“It’s fine for companies to offer refund credit notes, but they should be an option,” he said.